Wednesday, May 20, 2009

Bringing Back the Postal Savings System

The USPS Inspector General's blog, Pushing The Envelope, did a post recently on the Postal Savings Act of 1910 that authorized the Post Office Department “to establish postal savings depositories for depositing savings at interest with the security of the Government for repayment thereof, and for other purposes.”

According to the site, Postmaster General John A.J. Creswell first recommended a postal savings bank for the United States in 1871. But it wasn’t until the Panic of 1907, which shook the public’s trust in private banks, that the concept really gathered widespread support.

The Inspector General points out that, "In more than 40 countries, posts provide some type of banking services (for example, China, Italy, Japan, Israel, Austria, Brazil, and India). In fact, during the current downturn, revenue from financial services has helped sustain some posts."

Lind argued that “the current structure of public and private finance chronically fails to address four problems: the almost 10 percent of Americans without a bank account; the concerns of all Americans about the security of their savings, the growing indebtedness of the country to foreign governments and financial institutions, and underinvestment in public assets like sewer systems and bridges.”

In his view, an updated postal savings system would address these and other issues.